Correlation Between Harvest Microsoft and Harvest Eli

Can any of the company-specific risk be diversified away by investing in both Harvest Microsoft and Harvest Eli at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Harvest Microsoft and Harvest Eli into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Harvest Microsoft Enhanced and Harvest Eli Lilly, you can compare the effects of market volatilities on Harvest Microsoft and Harvest Eli and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Harvest Microsoft with a short position of Harvest Eli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Microsoft and Harvest Eli.

Diversification Opportunities for Harvest Microsoft and Harvest Eli

-0.66

Correlation Coefficient

Harvest Microsoft  Harvest Eli

Excellent diversification

The 3 months correlation between Harvest and Harvest is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Microsoft Enhanced and Harvest Eli Lilly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Eli Lilly and Harvest Microsoft is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Harvest Microsoft Enhanced are associated (or correlated) with Harvest Eli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Eli Lilly has no effect on the direction of Harvest Microsoft i.e., Harvest Microsoft and Harvest Eli go up and down completely randomly.

Pair Corralation between Harvest Microsoft and Harvest Eli

Assuming the 90 days trading horizon Harvest Microsoft Enhanced is expected to under-perform the Harvest Eli. But the etf apears to be less risky and, when comparing its historical volatility, Harvest Microsoft Enhanced is 1.16 times less risky than Harvest Eli. The etf trades about -0.06 of its potential returns per unit of risk. The Harvest Eli Lilly is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  913.00  in Harvest Eli Lilly on December 2, 2024 and sell it today you would earn a total of  124.00  from holding Harvest Eli Lilly or generate 13.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Harvest Microsoft Enhanced  vs.  Harvest Eli Lilly

Harvest Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harvest Microsoft Enhanced has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Harvest Microsoft is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Harvest Eli Lilly

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Eli Lilly are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical indicators, Harvest Eli sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Harvest Microsoft and Harvest Eli

The main advantage of trading using opposite Harvest Microsoft and Harvest Eli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harvest Microsoft position performs unexpectedly, Harvest Eli can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Harvest Eli will offset losses from the drop in Harvest Eli's long position.

The idea behind Harvest Microsoft Enhanced and Harvest Eli Lilly pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.